Weekly Market Close and Opinions
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W. low(er) yields for fixed income instruments, a bunch of players are selling volatility in order to increase returns (collecting premia). Hence volatility compression and what is visible on the VIX.
When these players will be proven wrong on their bet, there will be a BIG air pocket, imho.
My 2cts.
LPG
Big spike in Vix coming next week you think?
Tad,
Assuming your question was addressed to me, I’ll just say I have no idea.
G20 this week-end: that’s all I care about at this stage.
Best,
LPG
Ha ha… Noted 🙂
Tad,
2 more things.
1) I keep an eye on SPY for a potential short. BUT… I’d like it to be a bit higher in order to proceed.
Assuming we go there without a meaningful pullback, I’d prefer the 2300pts region to initiate a short. But that’s just me.
2) I believe the market is mispricing the potential of a Sept rate hike – fwiw.
Best again,
LPG
LPG,
You have a feeling that the Fed is going to surprise everyone with a hike this month?
Hello Bob,
I have been wrong in the past re: timing of when the Fed would hike.
Re: Sept, I think it will indeed.
If FOMC members really wanna cover their a**, they do it in December, when Q3 GDP figures will already be out. But without going into the details of elements i consider – coz it’s irrelevant: who cares ? – I do think a hike will come this month.
Have a good WE,
Best,
LPG
Thanks.
Corey. None can predict the future, but when Japan is buying US stocks, and when the Emergency Stabilization Fund is buying US stocks, why do you expect the market to behave logically; determined by supply and demand?
Until the General Election all is a mirage.
LBMA is short of physical silver, so silver will not be knocked down.
The COMEX will be short of both silver and gold, I believe, before year-end, so It has to be careful.
Check out the 5 miners that DB holds that the Swiss Bank doesn’t. It won’t be pretty if DB has to liquidate their positions in those companies without the Swiss to bail them out.
DEUTSCHE BANK DISCLOSES $2 BILLION GOLD AND SILVER MINING SHARE PORTFOLIO
Louis Cammarosano ⋅ Aug 2016
https://smaulgld.com/deutsche-bank-discloses-2-billion-gold-silver-mining-share-portfolio/
Big day for Exeter….up 12% a
Jerry,
You might have noticed, up 7cts (w. a “c”, not a “p”) in the last 20mn of the session…
Best as always,
LPG
Nice day for the stock , beats money in a bank savings account. 🙂 Hope you have a great weekend.
What you mean Jerry ?
That paper profits on paper in a brokerage accounts is better than paper money in a bank account ?
🙂 🙂 🙂
Wishing you a great WE as well.
LPG
Shad,
If those stocks are owned in segregated accounts – which I suspect – then I don’t see why DB should liquidate them…
My 2cts.
LPG
I guess I was imagining them going bust and liquidating those larger holdings. The article was hinting out how all the other miners they hold are back stopped by support from the Swiss bank, but on those 5 there would be few buyers large enough to mop up that many shares if they did need to cut bait and run….
Shad,
Why do you assume all those miners holdings are on DB’s book ?
IFFFF, as I assume, all of these holdings are held by the various asset management units, then they are likely not on DB’s books. And hence, this article, like another one – along the same lines a few days/weeks ago, based on the same data, and which was pasted by someone on KER’s blog – is a lot of n-o-t-h-i-n-g.
My 2cts.
LPG
Yes, you could be right that it is alot of “nothing;” however, at least it is nice list of their holdings and weightings so that is “something.” 🙂
As you said, IFFFF you “assume” they are segregated accounts and held by various asset management units, then the risk is dispersed and compartmentalized. That’s a big unknown though. The article never said how those securities were held by DB.
The article seemed to imply a different if. IFFFF DB has a major bust (which we can also assume is more likely than it was a few years ago, and let’s be honest here, other banks have failed in epic fashion before them), then they could liquidate certain assets [those holdings included]. They all roll up under their umbrella at one point, segregated or not.
I really don’t have that much invested in the article personally, but the Euroland experiment isn’t on strong footing, and it would not surprise me to see issues with Deutsche Bank in the not so distant future. It just seemed interesting and worth posting for a discussion, so that thanks for responding…. that was the idea.
My 2 cents.
All the best amigo.
I didn’t get the impression after going back and rereading it that this was customer accounts, or different divisions even. It could just be a bad article, but the impression it leaves is that these are the holdings of DB itself. IFFF that is the case then DB could liquidate them from their holdings. If they are customers holdings, then they are mostly irrelevant to DB if they implode, and I believe this was the point you were making.
Who knows? Who cares?
The more I think about it, you’re right, it’s a pointless article because it didn’t give key pieces of info.
I’m not going to lose any sleep over it though 😉
Have a great weekend.
Ok, couple of things:
1) Here’s the thing to focus on, on this “pseudo” article:
The holdings refer to DB’s investment management affiliates*
2) DB Asset management manages about US$800bn (source: https://fundsus.deutscheam.com/EN/about-us/who-we-are-key-figures.jsp )
So $2bn on PM stocks in the context of $800bn is “meeehhhhh” (0.25% of AUMs….)
It makes a nice headline for a pseudo article… but it’s “meeehhhhh”.
3) if you assume, like I do, that those investment management affiliates are asset management units where DB hardly has any of its own capital involved, then, legally, DB is not allowed to touch those assets.
It’s pretty plain and simple.
********
To me, these few lines of pseudo articles are there to get the PMs bugs excited. But their value is close to Z-E-R-O.
Of course DB’s asset management unit have been buying some PM stocks ! Duhhh… It’s one of the largest asset managers in the world… !!!
Next article will be what ? People will find out Blackrock also own some PM stocks ??? Surprise surprise ???
Hope you get my point.
Best as always & have a great WE.
LPG
Yes, that makes sense LPG. I do get your point and I think it is a valid one. I’m happy to stamp that as pseudo article, and am sorry I posted it now.
It is likely a hype article to get Gold Investors worried about DB taking down the share price of those mining companies in a banking implosion. Again we don’t know how much exposure DB has to those equities, as it still isn’t clear, but like you mentioned the “investment management affiliates” are probably just investing their clients funds.
* This does bring up a related question in my mind though. Wasn’t there some large hedge fund or investment bank that went under very publicly taking it’s clients investments down with them? I remember like a year or two ago some big bank going down and investors were outraged because they also lost their account holdings inside the framework of that financial institution. I can’t remember the name of the firm, but it made the news circuits for a while. Do you remember what I’m talking about?
Shad,
I think the firm you have in mind is MF Global, which was led by former GS Executive J.Corzine.
Best,
LPG
Yes! That was it. Man I could not think of that and it was driving me crazy. Thanks!!!
My favorite article this week.
That one has gotten me think – a lot – and still gets me thinking….
All have a great week-end.
LPG
The very use of bleachbit is proof of intent to deceive, by the criminal.
Could anyone doubt there is intent to deceive?
Even D voters seem to accept that she’s scum, they just rationalize it by shrugging and saying that they’re all scum, so ‘what difference does it make’?
SLV:GLD took back the 20 and 50 day MAs today and looks great:
The loonie took back the 50 day MA but not the 20:
Excelsior,
Reply to your comment Sep 1 market wrap,
You are right of course, about torque in the smaller companies,i own a few of those too.
But,i was thinking that the first move could come from the bigger companies.
Rick Rule thinks that Cameco could move like a penny stock,when uranium takes off.(I think he is right about Cameco,based on everything i know.(i dont know much)
Im sure you heard him speak of the bullwhip metaphor,were the bigger companies move first.
In this video at 07.00 he speaks of Cameco.
https://www.youtube.com/watch?v=xTgMculJXNM
Thanks for answering to my comment.
Well Rick Rule is a smarter man than I’ll ever be so I’d heed his advice. However, there are number of companies he’s dismissed in the past that have outperformed some of the ones Sprott got in bed with or some of his optionality plays. It really comes down to short to medium term, or longer term expectations, risk tolerance (penny stocks vs more established names, jurisdiction, share structure), and what investors think is happening with spot price.
In Uranium I’d draw a further distinction about whether the mine is going to be hard rock extraction or In-situ extraction. I’m a much bigger fan of in-situ extraction in the mid-term because the costs are much less (insitu U3O8 miners need the mid to high $20’s to low $30’s, where hardrock need $60 to break even and turn a coin). With in-situ mining, where they simply pump non-toxic fluids into the ground there is less disturbance to the land, lower capital costs, and it is very easy to start new wells. Hard rock miners (like what will be needed up in Canada or Australia or Africa) are VERY expensive, a permitting nightmare, and there are all kinds of challenges to get into the sandstone and basement hosted rock {and a fair share of ground water issues up in the Athabasca Basin}.
I do know of the “Bullwhip Metaphor” where the Majors, then Mid-tiers, then Jrs, then exploration plays move, and we just saw that with the Gold and Silver miners at the onset of 2016.
Personally Cameco is too large and clunky for me, like a Gold Corp or Barrick, but there is no doubt that they are the largest Uranium miner, followed by Rio Tinto and Areva.
I agree that when the spot prices finally do start to move, that the producers will experience immediate impacts to their balance sheets, and all of them in are in a position where they’re on life-support at present and could easily ramp up production in a hurry (over 3-6 months) if/when prices finally accommodate. For that reason I’m building up positions in Mid to Small producers, but have been trading the exploration stories in Canada as well.
On the KER Weekend show from Aug 6th I really camped out on Uranium Miners, and pretty much unpacked most of the key companies in the sector, so I’ll just post a link back to that. When Dragonite brought up the subject, I really spent some time on the response, and then Matthew, DFS, Tad, jhpace1, Archdeacon (!) Andrew, Canuckski, and others jumped into the mix. It was the best Uranium thread we’ve had in a long time, so no shame in revisting the info there:
http://www.kereport.com/2016/08/06/reasons-optimistic-today/
The Uranium thread starts about 1/3 of the way down when Dragonite asks the question:
Im just saying ,technically , Excelsior, dont kick my ass with your knowledge whip(just kidding)
I dont like the big dogs either,but if i can ride something up,i´ll take it. I made some nice gains in the bigger PM companies in Q2,no longer own them though.(still sitting on my core expl/small producers/etc(trimmed along the way and adding) that i bought for “nothing” in Winter of 2015.
Like i said, i own a few exploration/near term producers etc, in the pm/Oil/uranium space
And yes,Cameco is to large and clunky,But, i think Cameco will do a HMY/Harmony when it takes off.
I think that you Sir Excelsior,and Mr Rick Rule should get togheter and exchange some information,i bet that you could learn Mr Rule a trick or two.
Thank you again,Excesior for Everything,i really appreciate your knowledge and research that you post here.
I remember the uranium thread,thank you guys.
In the meantime,waiting for the GDXJ missile to reach the thin air.
Pete, the long-legged doji on the weekly chart indicates that the bulls and the bears are both very sure of themselves. Based on the rest of the chart, I have to side with the bulls at this time and probably for weeks to come.
Thanks Matthew, i really appreciate the input,im trying to tune up my technicals,maybe in a few years i will be able to do some wizard charting,(maybe)
Thank you.
Here’s a daily chart. The short term also favors the bulls:
Looking good,(short term,mid term)ready to bounce i think.
Thanks for the charts,Matthew
Thanks Pete, always glad to share. Yes, that is a good point that Cameco could do a Harmony Gold move and “trade like a penny stock” as Rick Rule mentioned. It would have the benefit of attracting more institutional money than many of the smaller companies, but it is easier for the smaller companies to go up multi-fold 3-10 times.
I do agree with Matthew that GDXJ is a bit of a tug-o-war between the bulls and bears, but I am also siding in the short term with the bulls.
Cheers!
Hey Ex, just wanted to point out that I was talking about CCO (Cameco) not GDXJ.
Woops, I see that now that I look at the chart. I thought were responding to his line:
“In the meantime,waiting for the GDXJ missile to reach the thin air.”
GDXJ has been a bit of a struggle with both bulls and bears over the last week or two, so it seemed like a fitting comment. 🙂
I have a small GDXJ position in place that I started the end of last week, so I’d like to see some follow though the beginning of this week.
Cheers, Beers, and Cameco charts!
Your gdxj position has made me stop and think. I am pretty convinced that the future will be good for the juniors so I may follow suite, excelsior.
Al, I am convinced that the future will be extraordinarily good for the juniors. I was equally convinced a year ago while many were worried that there was no end in sight for the bear market.
I believe that GDXJ was introduced in ’09 for what is still to come, not for what we witnessed in 2010-’11
We are in for THE bull market of our lifetimes.
GDXJ priced in gold shows that the next major move higher is probably many weeks away but that doesn’t mean the miners won’t do relatively well until then.
GDXJ:GOLD
http://schrts.co/TkMk3R
Thanks Matthew, I happen to agree with you.
I believe that the juniors have a bright future as well. There could be a little more pressure in the short term, but my thoughts were that we were starting to bounce in some of the miners towards the end of last week, and I thought I’d just go with the trend. Again, if there is confirmation tomorrow and Wednesday then we may have one more leg up before the fall correction.
This is a little dated editorial now (from late July) featuring Michael Belkin, but he brings up the point about institutional buyers that missed the mining rally in 2016, and now that many of these stocks are up multiple-fold, they are finally comfortable with their higher market caps and increased liquidity.
This makes sense to me, and is why I believe the pullbacks will be more shallow than many expected, and there is still plenty of money that is waiting to enter into the miners throughout the balance of 2016 and early 2017 to position for the long haul.
__________________________________________________________________________
Top Advisor To Sovereign Wealth Funds Says Gold & Silver Headed Into The Stratosphere Along With The Shares
July 29, 2016
“So that is my scenario. I think the next wave up in the gold stock market will be led by institutional investors buying into the rally that has already started. And some people are afraid. They say to me, ‘Gold stocks are up so much.’ But I really don’t think they have seen anything yet.”
Take a look at the RSI, MACD, and Stochastic readings at the recent low compared to the January low. We just might have seen a low that launches a rally that lasts right through the fall. It would be just like a bull market to deliver a convincing pullback that ends before anyone expects…
http://schrts.co/WdSFG8
I think we’ll know this week if that is what has happened.
Agreed that the pullback in miners already had many spooked, but it will likely end earlier than most expect, catches the masses off-guard once again. Yes, the RSI is in a similar place as the Jan low, and the MACD dove down further than I realized on this pullback, but looks like it wants to head back up again.
We’ll see how it goes, but I got active as a buyer in a number of stocks last week just in case the bull charges again when least expected…
macrovoices on oil:
http://www.macrovoices.com/podcasts/MacroVoices-2016-09-01-Art-Berman.mp3